Horsham Properties Group Ltd v Clark [2009] 1 WLR 1255

C claimed possession of a property formerly belonging to the defendants. D had fallen into mortgage arrears in respect of the property. In accordance with the Law of Property Act 1925 s.101(1)(iii), the mortgagee appointed receivers over the property who contracted to sell it at auction. On sale, the property was transferred to C, who became the registered proprietor. D remained in possession of the property and C instigated the instant claim. D submitted that the statutory power under the LPA would only be compatible with the Convention rights of residential mortgagors if it was construed as requiring a mortgagee first to obtain a court order for possession or to make an application for an order permitting sale.

Whether s.101 of the LPA, by permitting mortgagees to overreach their rights in relation to the mortgaged property by selling it out of court without first obtaining a court order for possession or sale, infringed the rights of mortgagers under the European Convention on Human Rights 1950.

Briggs J granted the purchaser possession. The statutory sale machinery did not infringe the property-right argument advanced merely because a prior court order had not been obtained. It implemented the mortgage bargain rather than imposing an unrelated deprivation. Following the completed sale, the purchaser claimed ownership free of the discharged mortgage. Section 36 did not provide discretion to suspend its claim as though it were still the mortgagee seeking enforcement of a subsisting loan. The court distinguished a successor to the mortgage from a purchaser of the mortgaged property. The decision does not remove all procedural or statutory protections from every modern residential repossession.

The mortgagee’s exercise of the statutory power of sale did not require a prior possession order on the human-rights argument advanced. After sale discharging the mortgage, a purchaser’s ownership claim is not automatically subject to the section 36 discretion applicable to a mortgagee’s possession proceedings.

Horsham highlights the difference between a mortgagee enforcing security and a buyer claiming possession after sale. That distinction can change which statutory discretion is available. It also shows why a challenge to the power of sale must be framed precisely. The case concerned the arguments and legislation before Briggs J; a current housing problem still requires separate consideration of any applicable later procedural, statutory or regulatory protections.